UPDATE 2-Brazil's inflation falls below 10 pct in March

viernes 8 de abril de 2016 11:08 GYT
 

(Adds comments, market reaction)
    By Silvio Cascione
    BRASILIA, April 8 (Reuters) - Brazil's inflation rate slowed
sharply in March to below 10 percent a year, the lowest in nine
months, although it still remained well above the government's
target despite a severe recession and one of the world's highest
interest rates.
    Consumer prices as measured by the benchmark IPCA index
 rose 9.39 percent in the 12 months through March,
down from 10.36 percent the previous month, statistics agency
IBGE said on Friday.
    The central bank's inflation target is 4.5 percent, a goal
last achieved in August 2010. 
    "Times of two-digit inflation are over," said BBVA economist
Enestor dos Santos in a note. 
    Prices rose 0.43 percent in March from February, slightly
below the median market forecast in a Reuters poll. It was the
lowest rate for March since 2012.
    Lower energy rates and mobile phone bills helped offset
another sharp increase in food prices, IBGE said, in what is
likely to be the beginning of a long period of slowing inflation
in Brazil as unemployment rises and an increasing number of
businesses file bankruptcy requests.
    The central bank expects price rises to slow this year to
near the top end of the government's tolerance range, at 6.5
percent. The recent strengthening of Brazil's currency, the
real, versus the U.S. dollar led to expectations that Brazil's
central bank would start cutting interest rates later this year.
    Yields on rate futures <0#2DIJ:> fell sharply as traders
added bets on upcoming rate cuts.
    Policymakers have ruled out easing policy in the short term
however, saying inflation expectations need to fall closer to
the inflation target before such a move is considered.
    "Inflation will continue to ease, but should only converge
to within the target range in 2017," BBVA's Santos said.
    Brazil's inflation soared last year after President Dilma
Rousseff's government pushed through a string of unpopular tax
and energy price increases in a bid to plug a massive budget
deficit. With her approval ratings near record lows, Rousseff
now faces an impeachment process in Congress.
             
    Below is the result for each price category: 
    
                               March        February  
 - Food and beverages          1.24         1.06     
 - Housing                    -0.64        -0.15      
 - Household articles          0.70         1.01     
 - Apparel                     0.69         0.24     
 - Transport                   0.16         0.62     
 - Health and personal care    0.78         0.94     
 - Personal expenses           0.60         0.77     
 - Education                   0.63         5.90     
 - Communication              -1.65         0.66     
 - IPCA                        0.43         0.90     
 
 (Additional reporting by Nacho Doce in Sao Paulo; Editing by
Chizu Nomiyama and James Dalgleish)